The Article discusses the recent United States Court of Federal
Claims' decision in Tulare Lake Basin Water Storage District v.
United States. Tulare is the first published court decision holding that
efforts to protect species under the Endangered Species Act constitute a
taking of property in violation of the Fifth Amendment. The Article
critiques the court's holding and concludes that the Tulare
decision was fundamentally flawed in at least two respects. First, the
court erred in finding that the Tulare plaintiffs' water contracts
constituted protectable property interests given the limited, contextual
nature of such rights under California water law. Second, the court
improperly applied a physical--as opposed to regulatory--takings
analysis, which led the court to find a taking per se. Had the court
conducted the more appropriate takings analysis, it would have found
that the de minimis actual impact on the plaintiffs' rights, as
well as the limited nature of the plaintiffs' reasonable
expectations to exercise those water rights in a manner that harmed
threatened species, combine to prevent any successful compensation claim
under the Fifth Amendment. For these and other reasons discussed in the
Article, the Tulare decision will be of lasting significance only if the
federal government falls, for political reasons, to appeal the decision.

I. INTRODUCTION

It finally happened. For the first time, a court has held that
restrictions imposed under the Endangered Species Act (ESA) (1)
constituted a Fifth Amendment (2) taking of property. In Tulare Lake
Basin Water Storage District v. United States (Tulare), (3) the United
States Court of Federal Claims held that water users in central
California suffered a physical taking of property when wildlife agencies
restricted water use to protect threatened winter-run chinook salmon (Oncorhynchus tshawytsha) and delta smelt (Hyponesus transpacificous)
from extinction. The restrictions took place during the 1992-1994
irrigation seasons, when the National Marine Fisheries Service (NMFS)
and the United States Fish and Wildlife Service (FWS) (collectively, the
Services) determined that a number of measures, including limits on the
amount and rate of irrigation use, were necessary to protect the fish
and their critical habitat. (4)

The question of whether ESA restrictions might effect a Fifth
Amendment taking has been the subject of intense speculation and
anticipation. (5) Up to this point, such claims have been rejected based
on a number of grounds, including ripeness, (6) failure to demonstrate a
cognizable property interest, (7) barred by contractual agreement, (8)
or simply rejected outright. (9) There is little doubt that the Tulare
holding will generate an increased number of takings claims. Already,
water users in the conflict-ridden Klamath Basin of southern Oregon /
northern California have filed a similar lawsuit. (10)

However, the ramifications of the Tulare decision are yet to be
seen, and those seeking government compensation in exchange for species
protection should not take comfort in the Tulare decision for several
reasons. First and foremost, the case is not over yet. The court ruled
on cross-motions for summary judgment on the issue of liability; the
case is still pending on the issue of damages. Upon final judgment, the
government will have the option of taking the issue before the Court of
Appeals for the Federal Circuit. Whether to appeal poses a political
question as much as a legal one. It was the Clinton administration that
implemented the ESA protections giving rise to the facts of Tulare. (11)
Whether the current administration, which has been openly hostile to the
ESA, will appeal the Tulare decision remains unclear. (12)

Next, the facts that gave rise to the Fifth Amendment taking in
Tulare will be hard to replicate. The Tulare plaintiffs are state water
contractors with the California Department of Water Resources (DWR).
(13) For reasons that will be explained in some detail, the overwhelming
majority of large water projects are federal. (14) Most federal water
contracts contain provisions that anticipate the need to restrict water
deliveries to protect fish and wildlife and therefore protect the
federal government from constitutional takings claims. (15) For this
reason, the Tulare decision is unlikely to have much influence in the
federal water project context. Conversely, state water contracts and
water rights such as those at issue in Tulare rarely have the level of
federal involvement necessary to make a Fifth Amendment takings claim
ripe for adjudication. (16) The California State Water Project (SWP) is
operated in coordination with the federal Bureau of Reclamation's
(BOR) Central Valley Project (CVP), and in most respects the two
projects operate in concert. (17) It is this unique relationship that
created the ESA restrictions at issue in Tulare. (18)

Finally, and most importantly, the Tulare decision is fundamentally
flawed in at least two respects. First, the Tulare court abdicated its
judicial responsibility by failing to determine the nature of the
property interest at issue in the case. This led the court, to assume
wrongly that the plaintiffs' water contracts were compensable property interests under the Fifth Amendment. The Tulare decision
involves the issue of water as property. Unlike land, which can be
privately owned, water is a public resource. And while private property
rights in water have long been recognized (including for takings
purposes), (19) water rights are subject to special limitations based on
their quasi-public status. These limitations include the rule of
reasonable use and the public trust doctrine, which under California law have had a large role in reallocating water for the protection of fish
and wildlife. For these reasons, water rights are fragile; they exist
only insofar as the water user exercises them in accordance with the
doctrine of reasonable use, which in turn requires a comparative
assessment of the value of competing demands for the water. (20) In
short, there is a far broader authority to alter water rights than to
adjust rights in other types of property under the Fifth Amendment. (21)
The Tulare court's refusal to address these intricacies caused it
to conclude erroneously that the Tulare plaintiffs had a protectable
property interest.

Second, the Tulare court erred in its constitutional analysis. The
court held that the government's actions constituted a physical
taking of property, as opposed to a regulatory taking, a determination
that led the court to conclude there was a per se or categorical taking.
By defining the restrictions as physical in nature, the Tulare court
erroneously focused on the result of the government action rather than
the character of the action itself. (22) This approach ignores the
purpose of, and the reason for, regulatory takings jurisprudence. The
government effects a physical taking only where it requires landowners
to submit to some type of permanent physical occupation or acquisition
of their land. (23) Regulatory takings, on the other hand, occur when
the government prevents a property owner from making a particular use of
his or her property. (24) Because the government action in Tulare
involved a restriction of the plaintiffs' use rather than an
acquisition or occupation of property, it was a regulatory action, not a
physical one. (25)

Had the court conducted the more appropriate regulatory takings
analysis, it would have been forced to address the fact that, despite
all the rhetoric, the actual impacts on the Tulare plaintiffs resulting
from the water restrictions were minimal. On average, water supplies
were reduced by less than three percent. (26) This de minimis impact,
when combined with the plaintiffs' lack of reasonable expectations
of a specific quantity of water under California water law, prevents a
successful regulatory takings claim.

This Article will explore each of these areas of law in some
detail. Part II begins with an account of the underlying facts of the
Tulare decision and the court's reasoning in the case. Part III
outlines the basic tenets of California water law, including the role of
the courts in defining the principles of reasonable use and public
trust, and concludes that the Tulare court failed to acknowledge its
proper role in addressing these issues. It then goes on to address the
nature and scope of the reasonable use and public trust doctrines and
argues that, had the court applied state law, it would have found that
the plaintiffs had no constitutional right to water deliveries that
threatened listed fish species.

Part IV focuses on the constitutional question and the physical
versus regulatory character of the taking found in Tulare. After
providing a brief history of the Takings Clause and the distinction
courts have drawn between physical and regulatory takings, it discusses
the current legal tests established by the United States Supreme Court for each type of taking. Part IV then applies this law to the facts of
Tulare and explains why a physical takings analysis is inappropriate.
Finally, Part IV argues that, even applying a regulatory takings
analysis, the facts of Tulare do not support a conclusion that a Fifth
Amendment taking occurred.

II. THE FEDERAL CLAIMS COURT'S DECISION IN TULARE

A. The Facts

The Tulare Lake Basin is located in California's Central
Valley, the most agriculturally productive region in the world. (27) The
Central Valley is the source of forty-five percent of the nation's
fruit and vegetables. (28) Its warm, dry summers and mild winters create
an ideal climate for agriculture --except for the absence of water. This
arid region receives almost no precipitation in the summer months, and
some areas receive as little as six inches of rainfall per year. (29) It
comes as no surprise, therefore, that the Central Valley is also home to
the nation's largest and most elaborate water supply system. (30)
While little rain falls in the Central Valley, the nearby Coastal and
Sierra Nevada mountain ranges collect upwards of 100 inches of
precipitation per year, mostly in the form of snow. (31) Left unimpeded,
this water flows down the Sacramento and San Joaquin Rivers and their
tributaries to the Sacramento-San Joaquin Delta, eventually making its
way to San Francisco Bay. (32)

As much as fifty percent of this water, however, no longer makes it
to the ocean. (33) The federal Bureau of Reclamation's CVP and
California's SWP together comprise a system of dams, reservoirs,
canals, and pumping systems designed to capture the spring and summer
runoff from the nearby mountains. (34) This system redirects water for
irrigation purposes throughout the Central Valley--and even as far south
as Los Angeles. (35) Combined, the CVP and SWP divert more than ten
million acre-feet of water per year to provide for the water needs of
two-thirds of California's population and millions of acres of arid
land. (36) This drastic manipulation of the ecosystem has a tremendous
environmental impact. Aquatic species in particular have suffered
setbacks resulting from this dramatic alteration of the natural system.
(37)

Two of these species, the delta smelt and the winter-run chinook
salmon, are at the heart of the Tulare litigation. Both fish are listed
under the ESA, and thus are afforded certain regulatory protections.
(38) Among those protections is ESA section 7. Section 7 requires that
federal agencies consult with the Services before authorizing, funding,
or carrying out agency activities to ensure that their actions are
"not likely to jeopardize the continued existence of any endangered
species or threatened species or result in the destruction or adverse
modification" of the species' critical habitat. (39)

To fulfill this requirement, in 1992 BOR initiated consultation
with NMFS regarding its operation of the CVP and the CVP's effects
on salmon. (40) Because California's DWR operates the SWP in
coordination with the CVP, DWR also participated in the consultation
process. (41)

This first consultation resulted in a biological opinion issued by
NMFS in February of 1992. (42) The 1992 biological opinion identified a
number of threats to winter-run chinook salmon resulting from the
operation of both projects. Problems such as increased water
temperature, decreased spawning and rearing habitat, and impaired fish
passage were largely attributed to lack of adequate instream flows. (43)
The 1992 biological opinion also identified problems associated with
entrainment--fish were caught up by the projects' pumping systems
and consequently removed from their habitat. (44) The 1992 biological
opinion concluded that the proposed operation of the CVP and SWP was
likely to jeopardize the continued existence of the salmon population,
and therefore included a set of "reasonable and prudent
alternatives" (RPAs) (45) that would allow the operation to
continue while still protecting the listed fish. The RPAs included
restrictions on the time and manner of water diversions from the
projects to provide the necessary water for instream flow and
water-quality requirements. (46) Both the CVP and SWP adopted the RPAs;
as a result, less water was made available for irrigation purposes.

The following year, NMFS issued a second biological opinion, again
determining that the listed salmon population was in jeopardy, and again
including RPAs for the projects' annual operations. (47) FWS
followed with its own biological opinion and RPAs for the two
projects' impacts on the listed delta smelt. (48) Again, water
deliveries were curtailed as BOR and DWR implemented the RPAs to protect
the fish. (49) In 1994, FWS issued yet another biological opinion,
leading to another imposition of water restrictions. (50)

As a result of these decreased water deliveries, the plaintiffs
brought suit in the Court of Federal Claims. The Tulare plaintiffs are
two water distribution organizations, Tulare Lake Basin Water Storage
District and Kern County Water Agency (including individual members of
those districts), whose water use was restricted during the 1992-94
irrigation seasons as a result of modifications made by DWR in its
operation of the SWP. The plaintiffs are not water permit holders
themselves but instead have contractual agreements with DWR, which is
the actual permit holder. (51)

Alleging that the federal government had imposed restrictions on
their contractually conferred right in a manner that constituted a
physical taking of property, the plaintiffs argued that the water
restrictions constituted a taking per se under the Takings Clause of the
Fifth Amendment. (52) In reality, however, the imposed water
restrictions had minimal actual impacts on overall water
withdrawals--the Tulare Lake Basin Water Storage District use was
reduced by approximately 9770 acre-feet of water in 1992, 26,000
acre-feet of water in 1993, and 23,050 acre-feet of water in 1994. (53)
Kern County Water Agency is alleged to have lost approximately 319,420
acre-feet over that same period. (54) While this may sound like a lot of
water, it pales in comparison to total use. The restrictions resulted in
an overall reduction in water availability of approximately 0.11% and
2.92% for Tulare and Kern County, respectively. (55)

B. Legal Analysis

The Court of Federal Claims first considered whether a Fifth
Amendment taking occurred and then considered whether the plaintiffs had
a protectable property interest. (56)

1. Held: Physical Takings

The court began by outlining the distinction between physical and
regulatory takings claims. (57) A physical taking, the court explained,
occurs when the government's action amounts to a physical
occupation or invasion of the property, including when the
government's action operates as "the functional
equivalent" of a "practical ouster of the owner's
possession." (58) Regulatory takings, by contrast, "[arise]
when the government's regulation restricts the use to which an
owner may put his property." (59)

Having outlined the general rules for each possible takings
analysis, the court quickly adopted the plaintiffs' position that
the restriction of water at issue in Tulare constituted a physical
taking. (60) The court readily acknowledged that the plaintiffs'
water right was essentially a "right to use." (61) However,
the court determined that it was precisely because the right was so
limited that it was particularly susceptible to a taking:

Unlike other species of property where use restrictions limit some, but not
all of the incidents of ownership, the denial of a right to use the water
accomplishes a complete extinction of all value. Thus, by limiting
plaintiffs' ability to use an amount of water to which they would otherwise
be entitled, the government has essentially substituted itself as the
beneficiary of the contract rights with regard to that water and totally
displaced the contract holder. (62)

The court characterized the government's action as "an
exclusive possession of plaintiffs' water-use rights for
preservation of fish" and concluded that, to the extent that the
plaintiffs were prevented from using water to which they would otherwise
have been entitled, the government rendered the usufructuary right to
that water valueless, and thus effected a physical taking. (63) Having
reached the conclusion that a physical taking had occurred, the court
never reached the question of whether the government action could be
characterized as a regulatory taking. (64)

To support its physical takings holding, the court relied primarily
on United States v. Causby. (65) At issue in Causby were frequent and
regular flights of military aircraft over the Causbys' 2.8-acre
home and chicken farm. (66) The Supreme Court held that the
government's use of the airspace immediately above the
plaintiffs' property was analogous to a physical taking in that it
was "as complete as if the United States had entered upon the
surface of the land and taken exclusive possession of it." (67) The
Tulare court compared the invasion of airspace in Causby to restrictions
on water. Water rights, the court held, were similarly subject to a
physical taking because the value is extinguished if the right of use is
denied. (68)

The court also cited and discussed two additional the United States
Supreme Court cases that addressed--or at least referenced--the issue of
water rights as subject to Fifth Amendment takings. The first of these
was International Paper Co. v. United States. (69) International Paper
concerned the government's seizure of all of the water-generated
electricity from the Niagara Falls Power project during World War I.
(70) A lease existed between the power company, the owner of the water
right, and lessee International Paper, allowing International Paper to
use a portion of the power company's water for paper production.
(71) Reversing the claims court, the Supreme Court held that a taking
had occurred. (72)

Second, the Tulare court cited Dugan v. Rank, (73) a case that did
not squarely address the issue of Fifth Amendment takings, but did make
"approving reference" to cases treating water rights as
subject to physical seizure. (74) The petitioners in Dugan held riparian
rights to continued water flow from the San Joaquin River for use along
the landowner's property, which was downstream from the CVP's
Friant Dam. (75) The issue before the Court was whether BOR or its
officials were immune from a suit seeking to enjoin them from impounding water in contravention of petitioner's riparian rights downriver.
Finding no waiver of sovereign immunity, the Court nevertheless reasoned
that the United States actually "acquired" the water rights in
question, and that the proper action was a takings claim. (76)

In Tulare, the government attempted to distinguish International
Paper and Dugan by arguing that those cases involved actual diversions
of water by the government for its own use, in contrast to the
regulation of water at issue in Tulare. (77) The Tulare court disagreed,
holding that because the ultimate result of the restrictions on water
was that less water was made available to the plaintiffs, the question
of "whether the government decreased the water to which plaintiffs
had access by means of a dam or by means of pumping restrictions amounts
to a distinction without a difference." (78)

2. Limits on the Ownership of the Water: Contract, Public Trust,
Reasonable Use, and Nuisance Considerations

Having concluded that a taking occurred, the court turned to the
question of whether the plaintiffs actually owned the property for which
they sought compensation. (79) The government put forth the two main
arguments regarding why the restrictions on the plaintiffs' water
use were not compensable.

First, the government argued that the plaintiffs' rights were
limited by language in their water contracts with DWR. Paragraph 18(f)
of their contracts contained a disclaimer of liability resulting from
"any damage, direct or indirect, arising from shortages in the
amount of water to be made available for delivery to the Agency ...
caused by drought, operation of area of origin statutes, or any other
cause beyond its control." (80) The government contended that tiffs
contractual provision precluded the plaintiffs from seeking
compensation, citing O'Neil v. United States. (81) In O'Neil,
the Court of Appeals for the Ninth Circuit held that language similar to
paragraph 18(f) precluded federal water contractors from bringing a
breach of contract suit against BOR. BOR had restricted water use in the
federally owned CVP to comply with ESA mandates to protect delta smelt
and winter-run chinook salmon. (82) The Ninth Circuit held that the
contract unambiguously relieved the government of liability in
connection with unavailability of water resulting from ESA mandates.
(83)

The Tulare court distinguished O'Neil, stating that in Tulare,
the federal government was not a party to the contract. Thus, while
paragraph 18(f) might provide contractual immunity for DWR, those
protections did not extend to the federal government: "Paragraph
18(f) in the contract ... does not render plaintiffs' interest in
the water contingent; it merely provides DWR with a defense against a
breach of contract action in certain specified circumstances." (84)
In short, as a "third party" to the contract, the government
had no contractual defense to a takings claim. (85)

Next, the government argued that the plaintiffs' water rights
were inherently limited by the common law principles of reasonable use,
the public trust doctrine, and nuisance law. Without disagreeing that
these doctrines imposed limits on the water rights at issue, the court
sidestepped any analysis regarding the scope of these limitations. (86)
Instead, the court held that the state administrative body, the State
Water Resources Control Board (SWRCB), had already determined that the
water rights at issue did not violate the reasonable use or public trust
requirements, and that this determination precluded further judicial
inquiry. (87) SWRCB issued an administrative decision in 1978 amending
the water rights permits of both the SWP and the CVP to address the need
for salinity control and protection of fish and wildlife. (88) The court
held that because this decision specifically authorized the use
allocations at issue, SWRCB effectively had determined that the water
withdrawals were both reasonable and in accordance with public trust
principles. (89)

While the court acknowledged that the state agency and the courts
had shared roles in defining the scope of the public trust and
reasonable use, it viewed that situation as unworkable and refused to
consider whether changed circumstances warranted a judicial
interpretation of the reasonable use and the public trust requirements.
(90) In doing so, the court emphasized the contractual nature of the
plaintiffs' rights with the state:

[T]he responsibility for water allocation is vested in the [SWRCB]. Once an
allocation has been made--as was done in [SWRCB's decision in 1978]
D1485--that determination defines the scope of the plaintiffs' property
rights, pronouncements of other agencies notwithstanding. While we accept
the principle that California water policy may be ever-evolving, rights
based on contracts with the state are not correspondingly self-adjusting.
Rather, the promissory assurances they recite remain fixed until formally
changed. In the absence of a reallocation by the [SWRCB], or a
determination of illegality by the California courts, the allocation scheme
imposed by D-1485 defines the scope of the plaintiffs' property rights.
None of the doctrines to which the defendants resort--the doctrine of
reasonable use, the public trust doctrine, or state nuisance law--are
therefore availing. (91)

Thus, despite its earlier recognition of the shared role of courts
and the state in defining the scope of the public trust and reasonable
use doctrines, the court abdicated its authority over these matters:
"It is the [SWRCB] that must provide the necessary weighing of
interests to determine the appropriate balance under California law
between the cost and benefit of species preservation." (92) The
court concluded that "[t]he federal government is certainly free to
preserve the fish; it must simply pay for the water it takes to do
so." (93)

III. DEFINING THE PROPERTY INTEREST: CALIFORNIA WATER LAW

From a practical point of view, the first inquiry in a Fifth
Amendment takings analysis should be whether there is a cognizable
property interest at issue in the case. While purportingly unwilling to
interpret some provisions of California law, the Tulare court actually
engaged in judicial activism by eliminating the proper role of the
courts in making reasonable use and public trust determinations. The
Fifth Amendment protects, but does not create, property rights. (94)
Courts must look to state law to determine whether a protectable
property interest exists. (95) Before reaching the constitutional
question, the court must first assure itself that there is a property
interest asserted that is capable of being taken. (96)

The Tulare court avoided this analysis when it held that the
SWRCB's administrative decision D-1485 constituted a fixed
determination of the water rights at issue. Specifically, the court held
that the issuance of the water rights in 1978 constituted an
administrative determination that plaintiffs' permitted use was
both reasonable and within the parameters of the public trust doctrine.
(97) It held that these administrative allocations, when combined with
the language of plaintiffs' contracts with DWR for specific amounts
of water, defined the plaintiffs' rights. (98)

Unfortunately, this holding ignores two basic tenets of California
water law that recognize a strong role for the courts in determining the
state's reasonable use and public trust requirements. This Part
first discusses the basics of California water law and California's
rule of reasonable use and the public trust doctrine, and then explains
why the court should have squarely addressed the legal question
involving state law rather than deferring to SWRCB's prior
administrative decision. This Part then goes on to explain that had the
Tulare court applied California law, it would have found that California
is unique among Western states in its application of the rule of
reasonable use and the public trust doctrine to reallocate water rights
to address environmental concerns. Finally, this Part asserts that
California courts have construed public trust and reasonable use
limitations to condition water rights themselves; the limitations
therefore do not constitute a Fifth Amendment taking of property.

A. California Water Law

1. The Basics

Water is a public resource. (99) As such, a water "right"
does not convey an actual interest in water itself. Instead, "[t]he
right of property in water is usufructuary, and consists not so much of
the fluid itself as the advantage of its use." (100) A water right
is a right to use the water--to divert water from its natural course and
apply it to a beneficial use. (101) Water rights are by nature more
contingent than interests in land. (102)

In California, there are basically two ways to acquire water
rights: riparian ownership and prior appropriation. (103) This dual
system makes California unusual among Western states in recognizing two
separate types of water rights. (104) The riparian system of water
rights has its origins in English common law. (105) It confers upon the
landowner the right to divert the water flowing along his or her
property for use upon that land, without regard to the extent of such
use or priority in time. (106) All riparians on a stream have
correlative use rights. In times of shortage, riparians share the burden
by reducing their usage proportionally. (107) This water-use system is
based on an assumption that there is usually enough water to go around
and is the predominant method of water distribution in eastern states.
(108)

The prior appropriation doctrine, by contrast, is predicated on the
notion that, at times, there will not be enough water to meet all of the
potential uses. Found mostly in the western states, prior appropriation
allocates water based on seniority. Prior to 1914, a water right was
obtained once an appropriator diverted water and applied it to a
beneficial use. (109) The appropriator received a priority date relating
to the initial date of diversion for the amount diverted, so long as the
amount was not wasteful or unreasonable. (110) California then adopted
to a permit system as the exclusive method of acquiring prior
appropriation rights based on the same basic "first in time, first
in right" principle but requiring administrative approval of the
right. (111) Prior appropriation rights not correlative; in times of
shortage, those with seniority have their rights fulfilled first.

An important defining characteristic of the prior appropriation
doctrine is that, unlike the riparian doctrine, diverters are not
required to own the land contiguous to the watercourse. (112) This
system became essential to California during the gold rush era, when the
miners adopted the doctrine as a means of diverting streams passing
through government lands for mining excavation purposes on nonriparian
lands. (113) Where conflicts arise between the two systems, prior
appropriation rights are subordinate to riparian owners' rights.
(114)

2. Era of Reallocation

It is somewhat ironic that California's dual system--and in
particular the need to address the inherent conflicts associated with
it--has resulted in the highly flexible water allocation system that
exists today. Early on, it was thought that California, like other
Western states, would eventually address these tensions by abrogating
riparian rights and moving to a pure prior appropriation system. But in
1886, a divided California Supreme Court confirmed the role of the
riparian doctrine and its superiority over prior appropriation rights.
(115)

Conflicts continued and increased as the state sought to develop
its water resources rapidly. These tensions finally culminated several
decades later in Herminghaus v. Southern California Edison Co. (116)
This decision gave rise to the strong reasonable use requirements now
found in California water law. Herminghaus involved a proposal by
Southern California Edison to impound water on the San Joaquin River for
hydropower generation. (117) Herminghaus sought an injunction, claiming
that the impoundment would interfere with the seasonal flooding of
riparian lands below the proposed dam. us Edison argued that
Herminghaus's inefficient technique of irrigating her lands by
taking advantage of natural flooding was unreasonable, and that she
therefore had no right to enjoin the project. The court held that the
superiority of the riparian right blocked the impoundment project.
Because Herminghaus's use was beneficial, she was, as a riparian
owner, under no obligation to use artificial means of irrigation.
According to the court, to hold otherwise would "impose a radical,
and, in its outworking, utterly impracticable, limitation upon the
doctrine of riparian rights." (119)

The reaction to Herminghaus was "swift and pointed."
(120) The California legislature quickly proposed a constitutional
amendment, which was ultimately adopted in 1928. The amendment declared
that water rights, including riparian rights, do not include the right
to the unreasonable use or waste of water. (121) Known as the "rule
of reasonable use," this provision is now considered the cardinal
principle of California water law. (122) The amendment forever changed the law, not only by requiring reasonable use of water, but also and
perhaps more significantly, by declaring that there is no water
right--and therefore no protectable property interest--where water is
used unreasonably. This provision thereby eliminated the need to
compensate water users if denied such use. (123)

When the amendment was adopted in 1928, reasonable use of water was
equated with development. Conservation meant "putting rivers, and
eventually their entire watersheds, to work in the most efficient way
possible for the purpose of maximizing production and wealth."
(124) The amendment was designed to prevent the outcome in Herminghaus,
where outmoded riparian uses prevented the development of a larger
irrigation enterprise. By declaring that the right to use water did not
extend to unreasonable use, water development was made less expensive.
(125) Not surprisingly, early cases interpreting the amendment favored
water development. (126)

However, as California and its needs have changed, so has its
definition of reasonable use. During the last two decades, environmental
concerns have reconfigured California water policy. This new era,
sometimes referred to as the "Era of Reallocation," is
redefining the state's water priorities by leaving water instream
to protect fisheries and water quality. (127) For this reason, some have
proclaimed that "[w]ater law in California today is primarily
environmental law." (128)

The two major vehicles by which this change has occurred are the
rule of reasonable use and the public trust doctrine. In terms of the
rule of reasonable use, the seminal case that distinguished this new era
is United States v. State Water Resources Control Board, also known as
"the Delta Decisions." (129) The Delta Decisions are a set of
eight consolidated cases challenging SWRCB's authority to modify
water permits in order to address environmental concerns in the
Sacramento San Joaquin Delta. (130) SWRCB modified water permits
associated with both the SWP and the CVP to address the water quality
problems by increasing instream flows. The court of appeals held that
SWRCB had this authority, based both on the agency's explicit
reservation of jurisdiction contained in the permits, and on
SWRCB's continuing authority to enforce the constitutional
limitation on unreasonable use. (131) Noting that the definition of
"reasonable use" changes over time and depends on the
circumstances of each case, the court upheld SWRCB's authority to
modify the permits when changed circumstances revealed "new
information of the adverse effects of the projects upon the Delta [that]
necessitated revised water quality standards." (132) In short, what
was reasonable had changed, and the water right changed along with it.
(133)

The public trust doctrine is the other primary means by which
California has entered into the Era of Reallocation. The public trust
doctrine is also a remnant of English common law and the Roman legal
concept of common ownership of the rivers, harbors, sea, and seashore.
(134) The basic notion behind the public trust doctrine is that
navigable waterways and the lands beneath them are owned by the
sovereign, who in turn holds them in trust for the benefit of all
people. (135) Much like the rule of reasonable use, California
courts' interpretations of the public trust doctrine have evolved
over time. (136) Initially, the courts kept a narrow focus on
navigation, commerce, and fisheries. (137) Eventually, the
doctrine's scope broadened into recognition of the protection of
aquatic ecosystems and the intrinsic value of habitat. (138)

The California Supreme Court's decision in National Audubon
Society v. Alpine Superior Court (National Audubon) (139) is the
landmark case that brought water rights within the realm of the public
trust. National Audubon involved a challenge by environmental groups to
protect Mono Lake following SWRCB's issuance of water permits to
Los Angeles. The city had diverted nearly the entire flow of four out of
five of the lake's tributary streams for its municipal water
supply. (140) The plaintiffs argued that the beds and waters of the lake
were protected by the public trust and that the proposed diversions
violated that trust by damaging public trust resources, including
recreational and ecological values. (141)

The court agreed, holding that the protection of these values is a
purpose of the public trust and that the public trust doctrine protects
navigable waters from harm caused by water diversions, including
diversions from nonnavigable tributaries. (142) The court noted that
much like the definition of reasonable use, the notion of public trust
changes over time and that "[t]he public uses ... are sufficiently
flexible to encompass changing public needs." (143) For this
reason, the court held that the state has a continuing responsibility to
protect trust uses and has the power to reconsider previous water
allocation decisions. (144) While the court recognized that the state
had the authority to grant water rights, it emphasized that before doing
so, the state must first consider the impact of such allocation on the
public trust. (145) Furthermore, the court reaffirmed that where the
public trust is established to protect resources, no Fifth Amendment
taking of property exists. (146) Any rights associated with the water
are held subject to the trust. (147) Moreover, "the state, acting
either through the courts or the State Water Resources Control Board,
may modify existing water rights to ensure that the uses of water
authorized by the state keep pace with contemporary economic needs and
public values." (148)

B. The Role of Courts in Defining California Water Law

The Tulare court avoided any substantive consideration of the
reasonable use and public trust issues, and instead held that the
"public trust and reasonable use doctrines each require a complex
balancing of interests--an exercise of discretion for which this court
is not suited and with which it is not charged." (149) An
examination of California law, however, reveals that the courts are in
fact charged with precisely this responsibility, at least with regard to
reasonable use determinations. (150)

The seminal case in this area is the California Supreme
Court's decision Environmental Defense Fund, Inc. v. East Bay
Municipal Utility District. (151) In Environmental Defense Fund,
environmentalists challenged a proposal to construct a dam on the
American River as violating California's rule of reasonable use.
(152) A key jurisdictional issue in the case was whether the plaintiffs
were required to exhaust administrative remedies by first bringing the
reasonable use challenge before SWRCB. (153) Citing other instances in
which the courts have adjudicated reasonable use questions, the supreme
court held that administrative exhaustion was not required, stating that
"[t]he courts have concurrent jurisdiction with the legislatively
established administrative agencies to enforce the self-executing
provisions of [California's reasonable use requirement]. Private
parties thus may seek court aid in the first instance to prevent
unreasonable water use or unreasonable method of diversion." (154)
In so ruling, the court explicitly rejected the notion that by retaining
jurisdiction over water determinations SWRCB's deprived the court
of jurisdiction. (155)

In fact, in California, the determination of reasonable use is
ultimately a judicial question. (156) In People ex rel. State Water
Resources Control Board v. Forni, (157) the court of appeals considered
whether SWRCB could promulgate a regulation limiting diversions of water
from the Napa River for frost protection during certain times of year to
prevent the unreasonable use of water. (158) The court upheld the
regulation, noting that:

Properly construed, [23 Cal. Admin. Code [section] 659] amounts to no more
than a policy statement which leaves the ultimate adjudication of
reasonableness to the judiciary. Indeed, the initiation of the present
action furnishes the best proof that [SWRCB] did not consider the
regulation and the policy declaration therein binding as to respondent
riparian owners, and submitted the issue for judicial determination. (159)

Under California law, it is the courts, not SWRCB, that ultimately
determine whether the reasonable use requirement is met.

California courts have concurrent jurisdiction for an important
reason--what is reasonable changes over time. (160) As discussed below,
what is reasonable under California water law has changed dramatically
over the last several decades, evolving from a defense of water
development to a tool for environmental protection. (161) In fact, the
water rights at issue in Tulare provide an excellent example of how the
nature and extent of California water rights change over time. The
initial 1978 administrative determination of the plaintiffs' water
rights, so heavily relied upon by the Tulare court to prove the
plaintiffs' rights, was reversed by the Court of Appeals decision
in United States v. State Water Resources Control Board. (161) While the
court held that SWRCB had the authority to modify the permits to address
water quality concerns, it also set aside the permit modifications
because SWRCB did not go far enough in addressing water quality
concerns. The court remanded the case to SWRCB for further reallocation
in accordance with its opinion. (163) In 1995, SWRCB issued its
reallocation of water rights for the CVP and SWP permits. (164) Because
this most recent permit decision adopted the salmon and delta smelt
protections outlined in the biological opinions, the plaintiffs'
takings claims are for the 1992-1995 irrigation seasons only. (165)

Had the Tulare court made the requisite effort to examine the
plaintiffs' water use in light of the rule of reasonable use and
the public trust doctrine, it would have found that in recent decades,
California has taken a bold approach to protecting its water resources.
Water use that adversely impacts fisheries, water quality, and other
environmental values can, at any time, be reallocated to protect those
resources. "In California, a property right in the state's
water resources is good only so long as the water is used relatively
efficiently in light of the competing demands and the holder of the
right exercises it in a mariner that comports with present societal values." (166) For this reason, application of reasonable use and
public trust doctrine rules would almost certainly have resulted in a
conclusion that the Tulare plaintiffs had no right to use the contracted
water in a manner that endangered the continued existence and
water-dependent habitat of two federally protected species.

The Tulare court attempted to avoid this conclusion by making much
of the fact that the plaintiffs were not the permit holders, but instead
had contracts with DWR--the actual permit holder--for specific amounts
of water. The court stated that "[w]hile we accept the principle
that California water policy may be ever-evolving, rights based on
contracts are not correspondingly self-adjusting. Rather, the promissory assurances they recite remain fixed until changed." (167) While
that may be the case, an examination of the contracts reveals that DWR
carefully worded the contracts to ensure that they did not commit to
delivering more water than was available under the permits. (168) Far
from having a right to a fixed amount, the contracts explicitly
recognize that DWR cannot deliver more water than it receives in a given
year. (169) This term is more than a contractual immunity provision, as
the Tulare court suggested; it is a recognition of the uncertain nature
of water availability under California law. The water permits themselves
clearly state that the rights issued therein are subject to change and
are not, as the Tulare court suggests, somehow fixed in time or amount.
The permits specifically state that SWRCB retained jurisdiction over the
water rights issued to prevent waste or unreasonable use. (170) In this
way, the permits were never fixed but were always subject to further
modification.

In short, contrary to the Tulare court's assumption, the
plaintiffs did not have a right to a specific amount of water. In
California, no one does. Water rights in California are highly qualified
by their very nature. Subsequent contracts cannot convey more than DWR
held in the first instance. Nor can those contracts obviate the
judiciary's responsibility to determine the nature and extent of
the property right at issue. To hold otherwise would produce the absurd
result of providing greater water rights to contactors than to the water
permit holders themselves. (171)

While the Tulare plaintiffs had contract rights to water, those
rights extended only to reasonable uses of that water. Reallocations
based on the rule of reasonable use and the public trust doctrine are
not Fifth Amendment takings because these legal requirements define the
nature and extent of the water rights themselves. In fact, California
carefully crafted its laws in such a manner to allow the reallocation
decisions necessary to protect reasonable and public trust uses without
having to compensate water users. (172)

By ruling otherwise, the Tulare court effectively turned California
water law on its head. As will be evident from the following examination
of Fifth Amendment takings jurisprudence, the Tulare decision provides
water rights with greater Fifth Amendment protection than real property
interests in land, an absurd result given the highly qualified and
contingent nature of the rights associated with this public resource.

IV. THE TAKINGS CLAUSE OF THE FIFTH AMENDMENT

The Takings Clause of the Fifth Amendment provides a simple
mandate--if the government takes your property, it has to pay you for
it. (173) But while the mandate is simple, its application has been
complicated. As one the United States Supreme Court Justice
acknowledged, "Even the wisest lawyers would have to acknowledge
great uncertainty about the scope of this Court's takings
jurisprudence." (174) For this reason, the Takings Clause is
perhaps best understood in light of its guiding principle, which is
"to bar Government from forcing some people alone to bear public
burdens which, in all fairness and justice, should be borne by the
public as a whole." (176)

This Part begins with a brief history of the Takings Clause and the
distinction that has evolved between physical and regulatory takings. It
then provides the current legal tests for each type of taking and
demonstrates how the Tulare court erred in applying a physical takings
analysis. Had the court properly construed the government action as
regulatory in nature, it would have found no taking. As will be
explained in some detail, regulatory takings are hard to come by. In
this case, both the de minimis economic impact of the regulation and the
inherent limits on the plaintiffs' reasonable expectations for use
of their water right place the government restriction on the Tulare
plaintiffs' water outside the realm of a compensable taking.

A. A Brief History of the Takings Clause

Prior to the Bill of Rights, state governments took property for
roads and other public projects without compensating the owners. (176)
While there had been some movement toward establishing the just
compensation principle during the 18th century, "there continued to
be a strong current in American legal thought that regarded compensation
simply as a `bounty given ... by the State' out of `kindness'
and not out of justice." (177) Only the constitutions of Vermont
and Massachusetts required that compensation be paid when private
property was taken for public use. (178)

As originally proposed, James Madison's version of the Takings
Clause prescribed that a property owner shall not be "obligated to
relinquish his property, where it may be necessary for public use,
without a just compensation." (179) The First Congress changed this
language during its consideration to its current form: "nor shall
private property be taken for public use, without just
compensation." (180) Some have argued that the Takings Clause was
originally intended to apply only to direct, physical takings. (181)
Others think that the broader language as ultimately adopted meant that
the framers "embrace[d] direct physical takings as well as other
types of Government authorized intrusions." (182)

Whatever the original intent, the issue was settled with the United
States Supreme Court's first regulatory takings case, Pennsylvania
Coal Co. v. Mahon. (183) Mahon involved a compensation claim brought by
the Pennsylvania Coal Company when a newly enacted federal mining law
prevented the mining of coal underneath Mahon's property. The coal
company sold the Mahons their property in 1878, but reserved the right
to remove all of the coal underneath it. Then in 1921, Congress passed
the Kohler Act, which forbade mining in a manner causing subsidence of
houses on the surface. (184) The Court held that this constituted a
Fifth Amendment taking. (185) Prior to Mahon, Court interpretations of
the Takings Clause reached only physical takings or their
"functional equivalent"; that is, where there was a
"practical ouster of the owner's possession." (186) In
Mahon, the Court extended takings jurisprudence into the regulatory
realm with the oft-quoted maxim, "while property may be regulated
to a certain extent, if regulation goes too far, it will be recognized
as a taking." (187)

Much of modern takings law since Mahon has been an ever-evolving
attempt to determine when a regulation goes "too far." The
physical-takings doctrine has also evolved, as has the interplay between
these two types of takings. It is this interplay that is at issue in
Tulare.

B. Physical v. Regulatory Takings--a Distinction with a Difference

The difference between regulatory and physical takings is--despite
what the Tulare court held--a distinction with a difference. (188)
Indeed, it was a distinction that made the crucial difference in Tulare.
To understand why, one must first understand the current legal tests for
each type of taking, as well as the differences between regulatory and
physical takings. (189)

A physical taking occurs where the government authorizes a physical
occupation of private property. (190) When such an invasion occurs, the
Constitution requires compensation. The leading case in this area is
Lorreto v. Telepropter Manhattan CATV Corp. (191) In Lorretto, the city
of New York passed a law requiring landlords to accommodate the
installation of cables on their private property so that cable companies
could provide cable services to tenants. (192) The Supreme Court held
that even though the physical invasion was a small one (consisting of
two cable boxes and some wire on the rooftop of the petitioner's
apartment building), a taking had nevertheless occurred because of the
"traditional rule that a permanent physical occupation of property
is a taking." (193) It was here that the Court created a per se
rule that a permanent physical occupation of property is a taking. (194)

There is, however, an important qualification to the per se rule
outlined in Lorretto. The Court was careful to apply its per se rule
only to permanent physical occupations of property. "The permanence and absolute exclusivity of a physical occupation distinguish it from
temporary limitations on the right to exclude. Not every physical
invasion is a taking." (195) The Court emphasized that takings
jurisprudence has always made a distinction between temporary physical
invasions and permanent physical occupations of property, particularly
in the flooding context. (196) Temporary physical invasions are--at
least for now--subject to "a more complex balancing process"
(197) to determine whether a taking has occurred.

A regulatory taking occurs, of course, when the government goes
"too far." (198) For several decades following Mahon, however,
there was no set formula for determining how fax was too far. Instead,
the courts engaged in ad hoc factual inquiries to determine whether a
taking had occurred. (199) In recent years, the Court has developed a
two-tiered regulatory takings test to inform the process. (200)

The first tier was articulated in Lucas v. South Carolina Coastal
Council. (201) Lucas essentially created a per se rule for regulatory
takings where the regulation at issue deprives the owner's property
of all use or value. (202) This per se rule is based on the theory that
total deprivation of beneficial use is equivalent to a physical
appropriation and that, where all use or value has been taken, the land
has essentially been "pressed into some form of public
service" for which compensation is due. (203)

The Lucas categorical rule applies only in the relatively rare
situations where a regulation results in the loss of all economically
beneficial use of the property. (204) This rule also contains an
important exception. Even if a regulation deprives a property of all use
or value, there is no taking where the regulation itself is grounded in
a state's "background principles of ... property and nuisance
already in place upon land ownership." (205) The reasoning behind
this exception is that where the regulation merely articulates rules
that applied to the land prior to ownership, the land owner never really
had the right to use his or her property in such a manner, so there is
no taking. (206)

The second tier of the regulatory takings test is applicable when
the property retains some use or value. The Court first articulated this
balancing approach in Penn Central Transportation Co. v. City of New
York (Penn Central) (207) as a way of adding some formalized predictability to the fact-bound, ad hoc approach spawned by Mahon. Penn
Central identified several factors of "particular
significance" in the ad hoc factual inquiries of earlier takings
cases. (208) The three primary factors to balance are: 1) "the
economic impact of the regulation on the claimant," 2) "the
extent to which the regulation has interfered with distinct
investment-backed expectations," and 3) "the character of the
governmental action." (209) As the Court recently stated,
"Penn Central does not supply mathematically precise variables, but
instead provides important guideposts that lead to the ultimate
determination whether just compensation is required." (210)

The Penn Central balancing test is a tough one for property owners
to pass. To date, the Supreme Court has never found a taking using the
Penn Central factors. The "distinct investment backed
expectations" factor has proven to be a particularly difficult
hurdle for many regulatory takings claims. Over time, this factor has
evolved to include a reasonableness requirement that is more than just
the investor's "unilateral expectation or abstract need."
(211) The Court looks not only to the specific regulatory regime in
place at the time, but also to the general regulatory climate to
determine whether the plaintiff's investment in purchase and
development are objectively reasonable in light of that climate. (212)

To summarize, while physical takings involve some form of
acquisition, regulatory takings involve some type of restriction. A
physical taking occurs when the government itself permanently occupies
the property or requires the property owner to submit to physical
occupation, whether by the government or a third party. (213) The
government effects a physical taking only where it requires the
landowner to submit to the physical occupation of his land. (214)
Regulatory takings, by contrast, may occur when the government prevents
the property owner from making a particular use of the property that
otherwise would be permissible. (215) The regulatory taking applies to
the property but does not physically invade it. (216)

C. As Applied: A Proper Takings Analysis

Applying the physical and regulatory takings tests to the facts of
Tulare, the first inquiry must be into the nature of the government
action. In this case, the government action restricted the
plaintiffs' water use. (217) Specifically, the biological opinions
issued by the Services for the operation of the CVP and SWP identified
winter-run chinook salmon and delta smelt in jeopardy of extinction. The
Services recommended water flow regimes and temperature requirements
that, if implemented, would prevent jeopardy. As a result, the
government limited date, time and manner of water use, the methods of
diversion from the SWP. (218) The government placed limits on how the
plaintiffs could legally exercise their water rights.

However, it is equally important to note what the government did
not do. The government did not seize the water or divert it for
government purposes, as it did in International Paper. (219) The
government did not extinguish the plaintiffs' water rights to
create its own, as it did in Dugan. (220) Nor did it acquire the
property through physical invasion, as occurred in Causby. (221) In
short, the government did not divert the water for its own use, but
instead regulated how the plaintiffs could apply it to their uses,
leaving the overwhelming majority of water available for the
plaintiffs' diversion.

The Tulare court viewed this as a distinction without a difference
because the result was the same--water was left in the stream for fish.
(222) But the nature of the government action makes all the difference
in the Fifth Amendment context because the action forms the very basis
of the reasoned distinction between regulatory and physical takings
cases. When the government acts as regulator, it recognizes the
individual's property right but places limits on how that right can
be exercised to protect the common good (in this case, species
protection). When the government acts as a physical taker, it
substitutes itself as the property's beneficiary and acquires what
the plaintiff once had. Takings jurisprudence recognizes that, even when
acting as a regulator/protector, the government can go "too
far" and effect a compensable taking, as was the case in Mahon and
Lucas. (223) However, it also accepts that "[g]overnment could
hardly go on if to some extent values incident to property could not be
diminished without paying for every such change in the general
law." (224)

The Tulare court seemed confused by the physical outcome of the
government's action. However, it is not uncommon for regulatory
actions to have physical results. In fact, Mahon is a case in point. As
explained above, the property interests at issue in Mahon were
subsurface rights to coal. (225) The Court held that the regulation,
which essentially eliminated the coal company's ability to extract
the coal, constituted a regulatory taking precisely because it was so
like a physical taking. (226) The Court stated that "[w]hat makes
the right to mine coal valuable is that it can be exercised with profit.
To make it commercially impracticable to mine certain coal has very
nearly the same effect for constitutional purposes as appropriating or
destroying it." (227) In essence, the facts in Mahon presented what
is today considered a Lucas taking--a regulatory action that eliminates
all use or value of the property at issue.

In fact, Lucas provides another example of a regulatory action with
very physical results. Under the South Carolina law giving rise to
Lucas's claim, the land was required to be left essentially in its
natural state, resulting in a total loss in economic value. (228) The
numerous Clean Water Act (229) cases in which property owners are
required to leave land undeveloped to protect wetlands also involve
physical consequences caused by government regulation. (230) However,
these are all regulatory takings cases, even though the ultimate result
was coal left in the ground, or land left undeveloped. (231) Similarly,
while the Tulare plaintiffs were required to leave some water instream,
this requirement did not render the taking itself physical. It is the
government action, and not the ultimate result, that characterizes the
taking.

The regulatory action at issue in Tulare is much less dramatic than
the regulatory actions at issue in Mahon or Lucas. Far from being
deprived of all use or value, the Tulare plaintiffs suffered a less than
three percent decrease in water availability. (232) The plaintiffs
presented absolutely no evidence that they suffered any economic damages
resulting from the reduced water deliveries. Far from being deprived of
all economic or beneficial use to qualify for a per se regulatory
taking, the Tulare plaintiffs did not even argue that they suffered any
economic injury, which is no doubt why they were so eager to fall into a
per se category rather than face the Penn Central balancing test. (233)

Had the Tulare court applied the Penn Central test, it would have
likely held that the lack of economic impact precluded a successful
regulatory takings claim. Absent any actual injury, there is nothing for
which to compensate. (234) The "reasonable, investment-backed
expectation" factor would also have weighed heavily against the
plaintiffs. As discussed extensively in Part III, California's rule
of reasonable use and public trust doctrine place significant
constraints on plaintiffs' water rights to protect fish and
wildlife. These inherent limitations, when combined with the contractual
language limiting liability, would severely weaken any argument that the
Tulare plaintiffs had a realistic expectation to a certain amount of
water.

In addition, a regulatory takings analysis would have required the
Tulare plaintiffs to face yet another obstacle--the prohibition against
so-called partial takings. The regulation at issue in the case impacted
only a small part of the plaintiffs' water right, less than three
percent. (235) And while the Tulare court made much of this restriction,
stating that "the denial of a right to use the water accomplishes a
complete extinction of all its value" (236) and that the government
somehow took "exclusive possession of plaintiffs' water-use
rights for preservation of fish," (237) in fact, nothing could be
further from the truth. The plaintiffs continued to enjoy their water
rights almost in their entirety. In the regulatory takings context, this
is essentially a partial takings argument.

The doctrine of partial takings, however, has not been recognized
by the Supreme Court. Though Federal Circuit decisions are conflicting,
(238) and takings proponents make much of footnote 7 of Lucas in which
Justice Scalia raised the specter of partial takings, (239) the Supreme
Court has steadfastly maintained that one must look at the "parcel
as a whole" (240) to determine whether a regulatory taking has
occurred. Looking at the parcel as a whole in Tulare means looking at
the whole water right. The less than three percent deprivation is both
outside a Lucas-type taking and unlikely to survive a Penn Central
analysis.

The hurdles involved in a successful regulatory takings claim are
so obvious that the Tulare plaintiffs did not try to argue a regulatory
taking theory but instead relied entirely on a physical takings
argument. However, the court should never have embraced that argument.
The distinction between physical and regulatory takings is an important
one. It is the difference between government acquisition and government
control. When the Tulare court ignored this distinction and instead
looked at the result of the government's action rather than the
character of the action itself, it wrongly determined that a physical
taking had occurred. Had the court appropriately viewed the
government's role as regulatory in nature, it would have found that
both the de minimis economic impact and the plaintiffs' lack of
reasonable expectations prohibited a successful takings claim. In short,
there was no taking, physical or otherwise, and therefore no
compensation due.

V. CONCLUSION

While the Tulare decision may go down in history as the first case
in which an ESA restriction was held to constitute a Fifth Amendment
taking of property, it is unlikely to be of further significance. From a
practical standpoint, the facts and circumstances will be difficult to
replicate. More importantly, from a legal standpoint, the Tulare court
made two major mistakes. First, it erroneously concluded that the
plaintiffs had a protectable property interest in a specified amount of
water. Had the court examined state law and applied California's
rule of reasonable use and the public trust doctrine, it would have
found that the Tulare plaintiffs lacked the necessary cognizable
property interests for their Fifth Amendment takings claim.

Second, the court applied the wrong takings analysis. The
government's restriction of the plaintiffs' water supply was
regulatory in nature--not physical. Under a regulatory takings analysis,
the water restrictions at issue in Tulare were a legitimate exercise of
government power that did not deprive the plaintiffs of their property.

For these reasons, the Tulare court's holding may be of
lasting importance only if the federal government fails to appeal the
decision. Failure to do so will say less about the strength of the
court's decision than about the willingness of the current
administration to protect species and take ESA implementation seriously.

(9) See Christy v. Hodel, 857 F.2d 1324, 1334-35 (9th Cir. 1988)
(bears are not federal government agents causing take under the ESA);
Florida Game and Fresh Water Fish Comm'n v. Flotilla, Inc., 636
So.2d 761, 763-64 (Fla. Dist. Ct. App. 1994) (restriction on development
of 48 acres of a 173-acre parcel to protect bald eagles not a taking);
Moerman v. California, 21 Cal. Rptr. 2d 329, 333-34 (Cal. Ct. App. 1993)
(endangered Tule elk are not instrumentalities of the state causing a
physical taking). Historically, the government has not been held liable
for property damage suffered by landowners caused by wildlife. See
Andrus v. Allard, 444 U.S. 51, 64 (1979) (Eagle Protection Act and
Migratory Bird Act prohibition on commercial transactions of avian artifacts not a taking); Mountain States Legal Found. v. Hodel, 799 F.2d
1423, 1430-31 (10th Cir. 1986) (damage caused by wildlife protected by
the Wild Free-Roaming Horses and Burros Act not a taking, even though
value of property was diminished). Perhaps the closest a court came to
addressing this issue in the water rights context before Tulare was
United States v. Gleam Colusa Irrigation District, 788 F. Supp. 1126,
1134 (E.D. Cal. 1992). There, the court, rejected defendant's
argument that state water rights were somehow exempt from federal laws
and that to hold otherwise would threaten the water rights themselves.
"[T]he [ESA] does not affect the District's water rights but
only the manner in which it exercises those rights." Id.

(10) Klamath Irrigation Dist. v. United States, No. 01-591L (Fed.
Cl. Oct. 11, 2001) (on file with the author); see also Farmers Sue U.S.
Over Irrigation Losses, THE OREGONIAN, Oct. 2, 2001, at C5 (detailing
the suit by individual farmers, businesses, and Tulelake Irrigation
District claiming compensation for the Bureau of Reclamation's
April 6, 2001 decision to shut off water to protect fish under the ESA).
Nancie and Roger Marzulla, the attorneys who represented the plaintiffs
in Tulare, also represent the Klamath petitioners. The Marzullas are
some of the most forceful advocates for the so-called "property
rights movement." Together, they wrote a book theorizing a number
of possible Fifth Amendment takings cases concerning environmental
protection statutes, including the ESA. NANCIE G. MARZULLA & ROGER
G. MARZULLA, PROPERTY RIGHTS: UNDERSTANDING GOVERNMENT TAKINGS AND
ENVIRONMENTAL LEGISLATION (1997). They are cofounders of Defenders of
Property Rights, a non-profit organization that refers to itself as
"the only National Public Interest Legal Foundation Dedicated
Exclusively to Private Property Protection." For more information
on this organization, as well as a detailed overview of the
Marzullas' legal careers, see http://www.defendersproprights.org.

(14) See infra notes 29, 33-36 and accompanying text. The Klamath
project, for example, is a federal water project operated by the Bureau
of Reclamation. Farmers Sue U.S. Over Irrigation Losses, supra note 10.

(15) See infra notes 39-50, 83 and accompanying text for a
discussion of federal water contracts.

(16) In fact, one could argue that the Tulare case itself was not
ripe because there was no actual government restriction or acquisition
of the plaintiffs' property. As will be discussed later, the
government action at issue is a section 7 consultation regarding the
Bureau of Reclamation's operation of the Central Valley Project.
Yet the consultation process has no binding authority on private parties
like the state, including DWR as operator of the State Water Project.
DWR's participation in the consultation process, including its
implementation of the restrictions at issue in the case, was completely
voluntary.

In the Fifth Amendment context, a takings claim is not ripe until
"the government entity charged with implementing the regulations
has reached a final decision regarding the application of the
regulations to the property at issue." Palazzolo v. Rhode Island,
533 U.S. 606, 618 (2001) (quoting Williamson County Reg'l Planning
Comm'n v. Hamilton Bank of Johnson City, 473 U.S. 172, 186 (1985)).
The SWP's voluntary participation in the consultation process did
not provide a final decision because the ESA provision directly
applicable to private parties is section 10. Endangered Species Act of
1973, 16 U.S.C. [section] 1539 (2000). ESA section 10 allows private
parties to seek an incidental take permit, accompanied by a conservation
plan. Id. Interestingly, neither the parties nor the amicus raised this
issue. However, as this is essentially an issue of ripeness, it is both
a jurisdictional and a prudential requirement that can be raised by any
party--or the court--at any time. For further discussion of the ripeness
challenges facing ESA takings claims, see James Rosen, Private Property
and the Endangered Species Act: Has the Doctrine of Ripeness Stymied
Legitimate Takings Claims, 6 HASTINGS W.-NW. J. ENVTL. L. &
POL'Y 31 (1999).

(17) Tulare, 49 Fed. Cl. at 314.

(18) See infra Part III.B (discussing the coordination between
these two projects).

(19) See, e.g., United States v. Gerlach Live Stock, 339 U.S. 725
(1950) (holding that landowners were due compensation for property
inundated behind Friant Dam); Dugan v. Rank, 372 U.S. 609 (1963)
(riparian and overlying owners sued to enjoin BOR from impounding water
at a federal dam on the San Joaquin River); Ball v. United States, 1 Cl.
Ct. 180 (1982) (recognizing existence of property rights in water).

(20) Brian E. Gray, The Modern Era in California Water Law, 45
HASTINGS L.J. 249, 271 (1994); see also Roderick E. Walston, The Public
Trust Doctrine in the Water Rights Context: The Wrong Environmental
Remedy, 22 SANTA CLARA L. REV. 63, 88 (1982) (promoting the usufructuary
principle and arguing that the usufructuary nature of water rights alone
makes water rights contingent such that the public trust principles are
unnecessary).

(30) California's Department of Water Resources has an
extensive overview of the Central Valley projects available at
http://www.dwr.water.ca.gov (last visited Mar. 12, 2002); see also MARC
REISNER, CADILLAC DESERT: THE AMERICAN WEST AND ITS DISAPPEARING WATER
348-54 (1986) (providing an extensive history of water development not
only in California but throughout the American West).

(34) The Central Valley is characteristic of much of the West,
which is known for its arid open landscapes and little water. This fact
led many to label early attempts at western expansion as foolhardy. For
example, Senator Daniel Webster, in addressing Congress on the issue of
whether to provide money to buy land beyond the Mississippi, expounded,

What do you want of that vast and worthless area, that region of savages,
wild beasts, of deserts, of shifting sands and whirling wind, of dust, of
cactus and prairie dog? To what use could we ever hope to put those great
deserts and those endless mountain ranges, impenetrable and covered to
their very base with eternal snow? What can we ever do with the Western
coast, a coast of 3,000 miles, rockbound, cheerless, and uninviting?

ARTHUR L. LITTLEWORTH & ERIC L. GARNER, CALIFORNIA WATER 1
(1995); see also United States v. State Water Resources Control Bd., 182
Cal. App. 3d 82, 97-100 (Cal. Ct. App. 1986) (providing a detailed
history of the CVP and SWP).

(35) Id.

(36) CALIFORNIA DEP'T OF WATER RES., BULLETIN 160-93, THE
CALIFORNIA WATER PLAN UPDATE, OCTOBER 1994 ch. 1 (1994), available at
http://rubicon.water.ca.gov/v1cwp/ch1ndx.html; see also Thomas, supra
note 33, at 5. Thomas explains that:

[u]ntil recently, California's legacy of native fishes included 116
species. Eight are already extinct and extinctions continue at the rate of
one every six years. Fifteen species are currently listed as threatened or
endangered under either or both the California and federal endangered
species acts, and another twenty-eight may qualify for listing. Twenty-one
additional species will require special management to arrest their decline.
All told, sixty-two percent of the state's native fish species have become
extinct or will require intervention to preserve them. These impacts are
nowhere more evident than in California's Bay/Delta region, where the
Sacramento and San Joaquin Rivers converge as they drain the state's
Central Valley.

Id. Nor is this problem unique to California. The Nature
Conservancy estimates that nationwide, the "four leading groups in
terms of proportion of species at risk--freshwater mussels, crayfish,
amphibians, and freshwater fish--all depend on rivers, streams, or
lakes." THE NATURE CONSERVANCY, 1997 SPECIES REPORT CARD: THE STATE
OF U.S. PLANTS AND ANIMALS 8 (1997).

(37) Thomas, supra note 33, at 5-6.

(38) See Endangered and Threatened Wildlife, 50 C.F.R. [section]
17.11 (2001), for a list of listed species. Delta Smelt are listed as
threatened under the ESA; winter-run chinook salmon are listed as
endangered. Id. Even though the delta smelt is listed only as
threatened, the fish still enjoys the full protections under the ESA
because the FWS has adopted a blanket regulation automatically extending
the prohibition against "take" to threatened species unless
otherwise provided by special rule. Id. [section] 17.31(a); see
Endangered Species Act of 1973, 16 U.S.C. [section] 1533(d) (2000)
(allowing the Services to extend full ESA protections to threatened
species).

(41) Id. at 314. The two projects are operated in concert pursuant
to a coordinated operating agreement between BOR and DWR. This agreement
was formalized in the Agreement Between the United States of America and
The State of California for Coordinated Operation of the Central Valley
Project and the State Water Project (on file with the author)
[hereinafter Agreement]. Congress authorized the Agreement in 1986. An
Act to Implement the Coordinated Operations Agreement, the Suisun Marsh Preservation Agreement, and to Amend the Small Reclamation Projects Act
of 1956, as Amended, and for Other Purposes, Pub. L. No. 99-546, 100
Stat. 3050 (Oct. 27, 1986). While the two projects are operated in
concert, they are under separate ownership and control, and the
Agreement specifically provides that "[n]othing in this agreement
shall constrain either party from moving forward with full utilization
of its facilities at any time." Agreement, supra, at 8.

(45) Where the activities of a federal agency are seen to
jeopardize the continued existence of listed species or cause the
destruction or adverse modification of critical habitats, the Endangered
Species Act directs the Secretary to suggest "reasonable and
prudent alternatives" to avoid such harms. Endangered Species Act
of 1973, 16 U.S.C. [section] 1536(b)(3)(A) (2000).

(47) Tulare, 49 Fed. Cl. at 315; NATIONAL MARINE FISHERIES SERVICE,
BIOLOGICAL OPINION FOR THE OPERATION OF THE FEDERAL CENTRAL VALLEY
PROJECT AND THE CALIFORNIA STATE WATER PROJECT (1993) (on file with the
author).

(48) Tulare, 49 Fed. Cl. at 315-16 (NMFS is generally responsible
for marine species, including anadromous species such as chinook salmon.
FWS is generally responsible for all other listings, including delta
smelt).

(49) Id. at 316.

(50) U.S. FISH AND WILDLIFE SERVICE, FORMAL CONSULTATION ON THE
1994 OPERATION OF THE CENTRAL VALLEY PROJECT AND STATE WATER PROJECT:
EFFECTS ON DELTA SMELT (1993) (on file with the author). After 1994, the
State Water Resources Control Board modified DWR water permits, adopting
the Services' water restriction and thus eliminating any basis for
a "take" claim by the plaintiffs. See infra note 90 and
accompanying text.

(51) Tulare, 49 Fed. Cl. at 315.

(52) Id. at 318.

(53) Id.

(54) Id. at 316.

(55) Declaration of David Purkey, supra note 26, at 3.

(56) This Article does not include a discussion of the first legal
hurdle the court addressed--the question of whether the United States
Supreme Court's ruling in Omnia Commercial Co. v. United States,
261 U.S. 502 (1923), barred a takings claim. Omnia Commercial stands for
the proposition that no Fifth Amendment taking occurs where the
government merely frustrates a contract's purpose. Onmia Commercial
involved the government requisition of Allegheny Steel Company's
entire production of steel plate during World War I. Id. at 507.
Petitioners brought suit, arguing that this action constituted a taking
of their contract rights for the steel. The Court held that there was no
taking because "the Fifth Amendment has always been understood as
referring only to a direct appropriation, and not to consequential injuries arising from the exercise of lawful power." Id. at 510.
The Tulare court distinguished Omnia Commercial, concluding that the
water users had more than just an enforceable contract and instead had a
property interest in the water at issue that had sufficiently matured so
as to place it outside the rule of Onmia Commercial. Tulare, 49 Fed. Cl.
at 318. The real question, however, is what the contracts actually
promised. As discussed in Part III, the plaintiffs in Tulare are not
entitled to specific amounts of water under their contracts, so there is
no compensable property interest to be "frustrated" under
Onmia Commercial. See also Joseph L. Sax, The Constitution, Property
Rights, and the Future of Water Law, 61 U. COLO. L. REV. 257 (1990)
(providing a general outline of the inherent limits on water rights as
constitutionally protected property).

(61) See id. (quoting Eddy v. Simpson, 3 Cal. 249, 252-53 (1853);
"the right of property in water is usufructuary, and consists not
so much of the fluid itself as the advantage of its use.").

(62) Id. The court's view that the government had somehow
re-appropriated the plaintiffs' rights for its own use was evident
at oral argument. The excerpt below demonstrates how the government
tried--unsuccessfully--to convince the court otherwise.

Government Counsel: "This is not an appropriation of water ..."
The Court: "But don't the biological opinions require the retention of
water in the system[?]"
Government Counsel: "The reasonable and prudent alternatives suggest,
statutory word, suggest, that water be retained in the system from Lake
Shasta in order to enable what, temperature and flow augmentation."
The Court: "But isn't that the equivalent of directing the use of water to
a particular constituency in this particular case, the constituency being
the fish?"
Transcript of Oral Argument at 36, Tulare (No. 98-101L) (on file with the
author).

(67) Id. at 261. The airplanes passed over the property at 83 feet,
only 63 feet above the house and just 18 feet above the highest tree.
Id. at 258. The petitioners were forced to give up their chicken
business and their residence as a result of disturbances to the birds
caused by the planes. Id.

(68) Tulare, 49 Fed. Cl. at 319.

(69) 282 U.S. 399 (1931).

(70) Id. at 404.

(71) Id. at 405-06. While the government promised the power company
it would be compensated for any losses, this promise did not extend to
International Paper. Id. at 407.

(72) Id. According to the Court,

There is no room for quibbling distinctions between taking of power and
taking of water rights. The petitioner's right was to use the water; and
when all the water that it used was withdrawn from the petitioner's mill
and turned elsewhere by government requisition for the production of power
it is hard to see what more the Government could do to take the use. Id.

(73) 372 U.S. 609 (1963).

(74) Tulare, 49 Fed. Cl. 313, 319 (2001).

(75) Dugan, 372 U.S. at 610. Riparian rights differ significantly
from the appropriation rights at issue in Tulare. See infra notes
119-130 and accompanying text regarding riparian water rights.

(76) Id. at 611.

(77) Tulare, 49 Fed. Cl. at 319.

(78) Id. at 320.

(79) Id.

(80) Id.

(81) 50 F.3d 677 (9th Cir. 1995).

(82) Id. at 681. O'Neil was essentially the federal water
contractors' response to the same facts that gave rise to the
plaintiffs' suit in Tulare. The O'Neil plaintiffs had
contracts with BOR for CVP water, while the Tulare plaintiffs held
contracts with DWR for SWP water. Id. at 683.

(83) Id. The language at issue in O'Neil was virtually
identical to paragraph 18(f). "Article 11(a) of the water service
contract provides that the government shall not be held liable for `any
damage, direct or indirect, arising from a shortage on account of errors
in operation, drought, or any other causes.'" Id. at 682. The
Ninth Circuit relied on the contract's "or any other
causes" language. "`[A]ny other causes' is a catchall phrase that does not `explicitly' include any particular causes....
`[A]ny other causes' broadly and unambiguously contemplates the
effects of subsequent Congressional mandates." Id. at 683.

(84) Tulare, 49 Fed. Cl. at 321.

(85) Id. O'Neil still provides a formidable hurdle for those
who, like the Klamath petitioners, seek to extend the Tulare decision to
federal Bureau of Reclamation projects. See supra note 10 and
accompanying text for a discussion of the Klamath case. Most federal
water contracts contain limits on liability for shortages of water
deliveries intended to protect fish and wildlife. See Reed D. Benson,
Whose Water Is It? Private Rights and Public Authority Over Reclamation
Project Water, 16 VA. ENVTL. L.J. 363, 399-400 (1997).

(90) The court seemed particularly concerned with the lack of
judicial resources, stating that "[w]e have many, many interests to
consider when we allocate water and those interests [are] often of
opposition. How can one possibly expect the court to gather the evidence
necessary to then strike an appropriate balance? That's a process
that goes on for months." Transcript of Oral Argument at 36, Tulare
(No. 98-101L).

(91) Tulare, 49 Fed. Cl. at 322 (citations omitted) (emphasis
added). The court's interpretation of the contract rights as fixed
in 1978 allowed it to simply side-step two important facts. First,
D-1485 was decided well before the listing of the delta smelt and
winter-run chinook salmon, as well as the jeopardy determinations and
need for water restrictions at issue in the case. Second, SWRCB later
did revise the fixed water right allocations. In 1995, SWRCB issued
D-95-1, which adopted the measures found in the Biological Opinions to
protect the delta smelt and the salmon. Id. at 322. The court
acknowledged the 1995 revision of the plaintiffs' rights, but held
that for purposes of this suit, it could not be retroactively applied to
the 1992-94 water restrictions at issue. Id.

(92) Id. at 324.

(93) Id.

(94) Phillips v. Wash. Legal Found., 524 U.S. 156, 164 (1998).

(95) Id.

(96) There are actually two ways in which the court might have
properly avoided this issue. The first would have been to certify the
question to the California Supreme Court. Certification is a process by
which federal courts can, while interpreting state law, ask the
state's highest court for advice on how it would answer the
question. CHARES ALAN WRIGHT, ARTHUR R. MILLER & EDWARD H. COOPER,
FEDERAL PRACTICE & PROCEDURE: JURISDICTION AND RELATED MATTERS
[section] 4248 (1988 & Supp. 2001). An example of certification in
the water context is the renowned California public trust case National
Audubon Society v. Superior Court of Alpine County, 658 P.2d 709 (Cal.
1983). The National Audubon Society decision was issued in response to
both a certified question to the California Supreme Court and the
plaintiffs' action for declaratory relief in the case filed
following the federal court certification request. Id. at 712. The
Federal Court of Claims considered certification in at least two
instances (both unpublished opinions). In one case, the court actually
certified a question on an issue involving state water law. Smith v.
Johnson Propeller Co., Case No. 93-CV-75463, 1996 WL 202674 (Cl. Ct.
1996) (Smith, J., dissenting) (advocating certification to the Michigan
Supreme Court); A-B Cattle v. United States, 219 Cl. Ct. 624 (1979)
(certifying a question of Colorado water law to Colorado Supreme Court).

The second way that the court could have appropriately avoided the
question would have been to ask the administrative agency for guidance.
California water code allows federal courts to seek administrative
assistance in making complex water law determinations regarding the
allocation of water. CAL. WATER CODE [section] 2075-76 (West 2002)
("In case suit is brought in a federal court for determination of
rights to water within, or partially within, this State, the board may
accept a reference of such suit as master or referee for the
court.").

(97) Tulare, 49 Fed. Cl., 313, 322 (Fed. Cl. 2001).

(98) Id.

(99) See CAL. WATER CODE [section] 102 (West 2002) ("All water
within the state is the property of the people of the State, but the
right to use water may be acquired by appropriation in a manner provided
by law.").

(101) See CAL. WATER CODE [section] 1240 (West 2000) ("The
appropriation must be for some useful or beneficial purpose, and when
the appropriator or his successor in interest ceases to use it for such
a purpose the right ceases."); see also 23 CAL. CODE REGS.
[subsection] 660-74 (West 2000) (an enumeration of recognized beneficial
uses in California, which include irrigation, domestic use, power, and
fish and wildlife protection).

(102) United States v. State Water Res. Control Bd., 227 Cal. Rptr.
161, 170 (Cal. Ct. App. 1986) (noting that "[u]nlike real property
rights, usufructuary water rights are limited and uncertain. The
available supply is largely determined by natural forces.").

(103) Although the riparian and prior appropriation doctrines
dominate, California also recognizes pueblo rights and prescriptive rights. William R. Attwater & James Markle, Overview of California
Water Rights and Water Quality Law, 19 PAC. L.J. 957, 960 (1988), Pueblo
rights are founded in Spanish law and recognize a right of pueblos to
use adjacent water sources that run through the pueblo from their source
to the sea. Id. at 969. Prescriptive rights allow water to be
redistributed through adverse possession. Id. Specifically, this allows
junior water right holders to immunize themselves against senior users
by open and notorious use of rights held by the senior water right
holder. Id. For this reason, some have argued that a more accurate
description of California's water allocation scheme is not dual,
but pluralistic. Id.

(104) Oklahoma and Nebraska are the only other states that have
dual appropriation systems.

(105) California adopted the riparian doctrine when it achieved
statehood and legislatively adopted English common law in 1850. United
States v. State Water Res. Control Bd., 227 Cal. Rptr. at 168 (citation
omitted).

(109) United States v. State Water Res. Control Bd., 227 Cal. Rptr.
at 168 (citing People v. Shirokow, 605 P.2d 859 (Cal. 1980)).

(110) Id. (citations omitted).

(111) Id. (citations omitted).

(112) Id. (citation omitted).

(113) Id. (citations omitted).

(114) Id. (citations omitted).

(115) Lux v. Haggin, 10 P. 674, 716-17 (Cal. 1886). Lux
successfully enjoined the Kern River and Canal Company from diverting
water from the Kern River upstream from his riparian lands. The court
rejected the defendants' argument that public policy considerations
required the court to allow appropriators to supercede riparian rights
where necessary to further water development, pointing out that riparian
rights could always be extinguished by means of eminent domain. Id. at
703-04. Lux v. Haggin was actually the first judicial application of the
riparian doctrine in California. The decision set forth a number of
doctrinal limitations, summarized and updated by Attwater & Markle,
supra note 103, at 970, as follows:

(a) The parcel of land enjoying a riparian right must at some point
be contiguous to the source stream in which the right is claimed;

(b) water may be used only upon that portion of the riparian parcel
which is within the watershed of the source stream;

(c) unless the right is reserved, a parcel severed from contiguity by conveyance loses the riparian right and it cannot thereafter be
reestablished;

(d) the right does not extend to seasonal storage of water, that
is, the collecting of water in a reservoir during times of surplus for
use during times of deficiency;

(e) the right is part and parcel of riparian land and cannot be
transferred for use on other lands.

Next is a list of attributes of the riparian right:

(a) Riparian rights are "paramount." This means that
riparian rights as a class must be satisfied before appropriators take
water;

(b) the right does not depend upon beneficial use of water for its
existence, and it is not lost by nonuse of water;

(c) unless adjudicated, the right is not quantified. Instead, it
extends to that amount of water that can be reasonably and beneficially
used on the riparian parcel;

(d) riparian rights are correlative. This means that at times when
the supply in the source is insufficient to satisfy all reasonable and
beneficial uses on riparian lands, the riparian proprietors share the
shortage.

Id. at 970-71.

(116) 252 P. 607 (Cal. 1926).

(117) Id. at 609.

(118) Id.

(119) Id. at 617.

(120) Attwater & Markle, supra note 103, at 979.

(121) CAL. CONST. art. X, [section] 2.

It is hereby declared that because of the conditions prevailing in this
State the general welfare requires that the water resources of the State be
put to beneficial use to the fullest extent of which they are capable, and
that the waste or unreasonable use or unreasonable method of use of water
be prevented, and that the conservation of such waters is to be exercised
with a view to the reasonable and beneficial use thereof in the interest of
the people and for the public welfare. The right to water or to the use or
flow of water in or from any natural stream or water course in this State
is and shall be limited to such water as shall be reasonably required for
the beneficial use to be served, and such right does not and shall not
extend to the waste or unreasonable use or unreasonable method of use or
unreasonable method of diversion of water. Riparian rights in a stream or
water course attach to, but to no more than so much of the flow thereof as
may be required or used consistently with this section, for the purposes
for which such lands are, or may be made adaptable, in view of such
reasonable and beneficial uses; provided, however, that nothing herein
contained shall be construed as depriving any riparian owner of the
reasonable use of water of the stream to which the owner's land is riparian
under reasonable methods of diversion and use, or as depriving any
appropriator of water to which the appropriator is lawfully entitled. This
section shall be self-executing, and the Legislature may also enact laws in
the furtherance of the policy in this section contained.

(123) Harrison C. Dunning, Article X Section 2: From Maximum Water
Development to Instream Flow Protection, 17 HASTING CONST. L.Q. 275, 276
(1989). The California Supreme Court has observed the four main
declarations of the amendment as the following: 1) the right to the use
of water is limited to such water as shall be reasonably required for
the beneficial use to be served, 2) such right does not extend to the
waste of water, (3) such right does not extend to unreasonable use or
unreasonable method of use or unreasonable method of diversion of water,
and (4) riparian rights attach only to the flow required or used
consistently with the reasonable use requirement. Peabody v. City of
Vallejo, 40 P.2d 486, 491 (Cal. 1935).

(124) Dunning, supra note 123, at 275-76 (quoting D. WORSTER,
RIVERS OF EMPIRE: WATER, ARIDITY, AND THE GROWTH OF THE AMERICAN WEST
155 (1985)).

(125) Id. at 276.

(126) See, e.g., Chow v. City of Santa Barbara, 22 P.2d 5, 16 (Cal.
1926) (economic use of California's waters is of utmost importance
to the state's development and well being); Joslin v. Matin Mun.
Water Dist., 429 P.2d 889, 891 (Cal. 1967) (the mere fact that a use may
be beneficial to a riparian land is not sufficient if the use is not
also reasonable); Waters of Long Valley Creek Stream Sys. v. Ramelli,
599 P.2d 656, 661 (Cal. 1979) (riparian water right that does not
promote reasonable and beneficial use is not vested); Dunning, supra
note 139, at 276; Gregory S. Weber, The Role of Environmental Law in
California Water Law Allocation and Use System: An Overview, 25 PAC.
L.J. 907, 919 (1994) (increased power of the public over water
allocations has halted further development of water supplies in the last
twenty-five years).

(127) See Gray, supra note 20, at 249, 253 (discussing the
development of California water law).

(130) United States v. State Water Res. Control Bd., 227 Cal. Rptr.
at 161, 165. These cases reflected changes to California water policy in
1967, when the state legislature created SWRCB by combining the roles of
water rights adjudication and water quality protection. SWRCB resulted
in the merging of two independent boards, the State Water Rights Board
and the State Water Quality Control Board. See Robie, supra note 129, at
1111-13 (discussing the importance of the Delta Decisions to California
law).

(131) United States v. State Water Res. Control Bd., 227 Cal. Rptr.
at 187.

(132) Id.

(133) The fact that California administratively combined its water
allocation and water quality duties and then used its authority to
reallocate water to protect instream uses itself reflects the new era of
reallocation. See Robie, supra note 129, at 1111.-13 (outlining the
history of SWRCB as well as the Delta Decisions); see generally Weber,
supra note 126 (discussing environmental law and California water
allocation).

(134) See Martha Guy, Comment, The Public Trust Doctrine and
California Water Law: National Audubon Society v. Department of Water
and Power, 33 HASTINGS L.J. 653, 658-61 (1982) (providing a detailed
account of the development of the public trust doctrine in California);
see also CAL. WATER CODE [section] 102 (West 1971) ("All water
within the State is the property of the people of the State, but the
right to the use of water may be acquired by appropriation in the manner
provided by law.").

(135) Ill. Cent. R.R.v. Illinois, 146 U.S. 387, 453 (1982).
Illinois Central R.R. grounded the public trust doctrine in American
jurisprudence, holding that the state of Illinois did not have the power
to convey tidal lands to private ownership in a manner that impaired
public trust rights. Id.

(136) See Nat'l Audubon Society v. Superior Court of Alpine
City, 658 P.2d 709, 719 (Cal. 1983) ("The objective of the public
trust has evolved in tandem with the changing public perception of the
values and uses of waterways.').

(140) Id. at 711; see also Michael C. Blumm & Thea Schwartz,
Mono Lake and the Evolving Public Trust in Western Water, 37 ARIZ. L.
REV. 701 (1995) (analyzing the National Audubon decision and its
important contribution to public property law).

(141) Nat'l Audubon, 658 P.2d at 712, 719. Because Mono Lake
is entirely dependent on its tributaries for its water supply, the
diversions drastically altered the lake level, and the surface area of
the lake diminished by one-third. Id. at 711. This reduction exposed the
California gull rookery to predators, increased the salinity of the
lake, and impacted both the scenic beauty of the lake and its ecological
value. Id.

(142) Id. at 719-20; see also United States v. State Water Res.
Control Bd., 227 Cal. Rptr. 161, 201 (Cal. Ct. App. 1986) (no vested
water right in manner which harms public trust).

(144) Id. at 728 ("[T]he state is not confined to past
allocation decisions which may be incorrect in light of current
knowledge or inconsistent with current needs.").

(145) Id. at 729; see also Walston, supra note 20, at 63 (arguing
that the public trust doctrine requires the state to make a choice
between trust trees, such as navigation or fishery protection, and other
uses, such as commerce, but does not dictate what the outcome should
he).

(146) Nat'l Audubon, 658 P.2d at 723.

(147) See id. at 721 ("[P]arties acquiring rights in trust
property generally hold those rights subject to the public trust, and
can assert no vested right to use those rights in a manner harmful to
the trust.").

(148) Gray, supra note 20, at 266.

(149) Id. at 323-24. At oral argument, in response to government
counsel's argument that the court was required to engage in such
determinations, Judge Weis stated:

You know, Mr. Bookshire, I'm sure you're right that the California courts
play a role in the process of establishing water allocations and resolving
other issues with respect to defining the competing interests that are
subsumed under the notion of public trust; but, I find the idea of a court
being the primary decider or co-equal in this process as too large a
proposition to believe.

Transcript of Oral Argument at 26, Tulare (No. 98-101L).

(150) Because both public trust and reasonable use requirements
change over time, the Tulare court also erred in failing to address
inherent public trust concerns. See Nat'l Audubon Soc'y, 658
P.2d at 732 (finding concurrent jurisdiction to make public trust
determinations while allowing the court to refer complex issues to the
state administrative board).

(158) Id. at 854; see also Imperial Irrigation Dist. v. State Water
Res. Control Bd., 231 Cal. Rptr. 283, 289 (Cal. Ct. App. 1987) (holding
that SWRCB was not required by the California Water Code to refer
reasonable use question to the California Attorney General for legal
proceedings in Superior Court). The concept of concurrent jurisdiction
is equally applicable to issues involving the public trust doctrine,
though the judiciary is not considered the ultimate authority as with
reasonable use determinations. Nat'l Audubon Soc'y v. Superior
Court of Alpine County, 658 P.2d 709, 713 (Cal. 1983).

(159) Forni, 126 Cal. Rptr. at 857.

(160) See Envtl. Defense Fund v. East Bay Mun. Util. Dist., 605
P.2d 1, 6 (Cal. 1980) (reasoning that what constitutes reasonable water
use changes over time); United States v. State Water Res. Control Bd.,
227 Cal. Rptr. 161, 187 (Cal. Ct. App. 1986) (holding that all water
rights are subject to continuing authority to prevent unreasonable use);
Forni, 126 Cal. Rptr. at 855 (finding that what is reasonable use of
water depends on the specific situation).

(161) See infra Part, III.B and accompanying text.

(162) 227 Cal. Rptr. at 202; see supra notes 129-133 and
accompanying text for more details on this case.

(163) Id. at 178-80. SWRCB improperly limited its water quality
goals to those that could be achieved by modifying the CVP and SWP water
permits without also addressing preproject water withdrawals. Id. at
180.

The Board's authority to review and amend these permits is derived from
Section 1394 of the California Water Code, jurisdiction expressly reserved
in subject permits, Water Code Section 100, and the continuing authority of
the Board, as stated in the terms of their permits, to prevent waste,
unreasonable use, unreasonable method of use, or unreasonable method of
diversion of water and Section 763.5 of Title 23 of the California
Administrative Code.

(171) SWRCB further clarified the relationship between water
contractors and water rights holders in an administrative decision
regarding the flow objectives for the Delta/Bay estuary, stating that

[a] water supply contract does not give the water supply contractor a legal
interest in the water independent of the rights of the water right holder.
Indeed, unlike persons who appropriate return flows from imported water,
water supply contractors do not themselves hold any water rights. Water
supply contractors have a right to use water only by virtue of their
contracts with their water suppliers ...
The contract does not create a right to divert or use water, except in
accordance with the rights of the water right holder, and does not define
or alter those water rights.

Defendants' Supplemental Brief at 4-5, In the Matter of Permit
12720 (citing Def.'s Ex. 01186-01187) (on file with the author).
The government used this administrative decision in supplemental
briefing as further evidence that the Omaia rule barred any
constitutional take theory based on the contractual nature of the
plaintiffs' interests. Id. at 5.

(172) See United States v. State Water Res. Control Bd., 227 Cal.
Rptr. 161, 171 (Cal. Ct. App. 1986) ("no water rights are
inviolable; all water rights are subject to governmental
regulation").

(173) U.S. CONST. amend. V ("nor shall private property be
taken for public use, without just compensation").

(181) Lucas, 505 U.S. at 1056 (Blackmun, J., dissenting) (citing
William Michael Treanor, The Origins and Original Significance of the
Just Compensation Clause of the Fifth Amendment, 94 YALE L.J. 694, 711
(1985). In his Lucas dissent, Blackmun made precisely this argument,
citing Professor Joseph Sax's observation that although
"contemporaneous commentary upon the meaning of the compensation
clause is in very short supply," the few authorities that are
available indicate that the clause was "designed to prevent
arbitrary government action," not to protect economic value. Id.
(quoting Joseph L. Sax, Eminent Domain, 74 YALE L.J. 36, 58-60 (1964)).
For example, according to William Michael Treanor:

[T]he federal Takings Clause and its predecessor clauses, as they were
originally understood, divided governmental actions affecting property into
two groups. When the government physically took property, it owed
compensation. Any other governmental action, no matter how severely it
affected the value of property, did not give rise to a compensation
requirement. This requirement applied to physical takings because the
framers believed that majoritarian decisionmaking processes would not give
fair consideration to the individuals interest in not having her property
physically seized by the government.

William Michael Treanor, The Original Understanding of the Takings
Clause and the Political Process, 95 COLUMBIA L. REV. 782, 859-60
(1995).

(189) The Supreme Court's most recent takings case decided
earlier this spring, Tahoe-Sierra Preservation Council, Inc., v. Tahoe
Regional Planning Agency, provided, in dicta, some further elucidation of the distinction between physical and regulatory takings. 2002 WL
654431, at *10 (U.S. 2002). The Court began by noting the textual basis
for the distinction:

The text of the Fifth Amendment itself provides a basis for drawing a
distinction between physical takings and regulatory takings. Its plain
language requires the payment of compensation whenever the government
acquires private property for a public purpose, whether the acquisition is
the result of a condemnation proceeding or a physical appropriation. But
the Constitution contains no comparable reference to regulations that
prohibit a property owner from making certain uses of her private property.
Our jurisprudence involving condemnations and physical takings is as old as
the Republic and, for the most part, involves the straightforward
application of per se rules. Our regulatory takings jurisprudence, in
contrast, is of more recent vintage and is characterized by "essentially ad
hoc, factual inquiries."

This longstanding distinction between acquisitions of property for public
use, on the one hand, and regulations prohibiting private uses, on the
other, makes it inappropriate to treat cases involving physical takings as
controlling precedents for the evaluation of a claim that there has been a
(`regulatory taking,') and vice versa. For the same reason that we do not
ask whether a physical appropriation advances a substantial government
interest or whether it deprives the owner of all economically valuable use,
we do not apply our precedent from the physical takings context to
regulatory takings claims. Land-use regulations are ubiquitous and most of
them impact property values in some tangential way--often in completely
unanticipated ways. Treating them all as per se takings would transform
government regulation into a luxury few governments could afford.

Id. at *11(footnote omitted).

For the purposes of Tulare, Tahoe-Sierra is simply a further
affirmation of the carefully crafted distinction between physical and
regulatory takings. Because it was issued more than a year after the
Tulare decision, and because the Tahoe-Sierra merely provides further
explanation of already existing law that the Tulare court could have and
should have properly applied to make a regulatory takings analysis, this
Article does not provide further application of the Tahoe-Sierra
analysis for the facts of Tulare.

(196) Id. at 428, 435 n.12; see also Pumpelly v. Green Bay Co., 80
U.S. 166 (1872) (discussing overflow from a dam); United States v.
Lynah, 188 U.S. 445, 468-70 (1903) (requirement for compensation not
defeated in government navigation project); Bedford v. United States,
192 U.S. 217, 225 (1904) (injury resulting from overflow not a direct
consequence of government action); United States v. Cress, 243 U.S. 316,
327-28 (1917) (compensation awarded for a taking resulting from lock and
dam construction); Sanguinetti v. United States, 264 U.S. 146, 149
(1924) (to be a taking, flooding must "constitute an actual,
permanent invasion of the land amounting to an appropriation of and not
merely an injury to, the property"); United States v. Kansas City Life Ins. Co., 339 U.S. 799, 809-10 (1950) (a taking when the government
raises and maintains a navigable stream at its high water mark).

(197) Loretto, 458 U.S. at 435 n. 12. The extent to which this
limitation on the physical takings per se rule has lasting viability
remains to be seen. In the Federal Circuit, for example, there is an
increasing tendency to see temporary physical occupation as a taking.
See Skip Kirchdorfer, Inc., 6 F.3d 1573, 1583 (Fed. Cir. 1993) (one year
invasion of a storage warehouse a physical taking); Hendler v. United
States, 952 F.2d 1364, 1376 (Fed. Cir. 1991) (holding "there is
nothing `temporary' about the wells the government installed on
plaintiffs' property" when years had passed since the
Government installed the first wells).

(198) Mahon, 260 U.S. 393, 415 (1922).

(199) Id. at 415-16.

(200) In addition, there is a special test for land use decisions
where approval of development is contingent on the dedication of
property to public use. Dolan v. Tigard, 512 U.S. 374, 386 (1994) (court
must first determine whether an "essential nexus" exists
between the legitimate state interest asserted and the permit condition
exacted and, if so, whether the required degree of connection exists
between the exactions and the projected impact of the proposed
development).

(201) 505 U.S. 1003 (1992).

(202) Petitioner Lucas owned two residential lots along the
ecologically sensitive South Carolina coast. Id. at 1006-07. The trial
court found that the South Carolina Beachfront Management Act (SCBMA),
S.C. CODE ANN. [subsection] 48-39-250-290 (Supp. 1990) deprived Lucas of
any reasonable economic use of his property. Id. at 1009. A number of
developments after trial, however, most notably the creation of a
special permit process allowing certain exemptions under the SCBMA,
reopened the question. For this reason, several members of the Court
viewed the majority's holding premature. Id. at 1046 (Blackmun, J.,
dissenting); id. at 1061 (Stevens, J., dissenting); id. at 1076
(statement of Souter, J.); id. at 1032 (Kennedy, J., concurring).

(203) Id. at 1017-18.

(204) Id. at 1017. While the Court made clear that the rule would
apply only under the "extraordinary circumstances when no
productive or economically beneficial use of land is permitted,"
the key question then becomes how the Court defines the parcel of land
at issue. Michael C. Blumm, The End of Environmental Law? Libertarian Property, Natural Law, and the Just Compensation Clause in the Federal
Circuit, 25 ENVTL. L. 171, 177 (1995).

(212) See Palazzolo, 533 U.S. at 634 (O'Connor, J.,
concurring); Good v. United States, 39 Fed. Cl. 81, 109 (1997) (no
taking where the pervasiveness of federal and state regulatory regimes
limiting development of coastal wetlands at the time developer purchased
and developed the property deprived the owner of reasonable investment
backed expectations of his development plan).

(214) Yee, 503 U.S. at 527. In Yee, the plaintiffs argued that a
rent control ordinance restricting mobile home park owners from raising
park fees constituted a physical taking. They contended that the rent
control effectively transferred an interest in land, i.e., the right to
occupy, to a third party--the mobile home owner--and that this was not
less than a physical occupation of the park owner's land. Id. The
Court rejected this view, holding that "[t]his element of required
acquiescence is at the heart of the concept of occupation." Id.
(quoting FCC v. Fla. Power Corp., 480 U.S. 245, 252 (1987)). Because the
plaintiffs voluntarily rented their land and retained their ability to
change the use of their land, there was no authorized physical
occupation and no taking. Id.

(215) Id.

(216) First English Evangelical Lutheran Church of Glendale v. Los
Angeles County, 482 U.S. 304, 308 (1987) (Stevens, J., dissenting).
According to Stevens,

[r]egulations are three dimensional; they have depth, width, and length. As
for depth, regulations define the extent to which the owner may not use the
property in question. With respect to width, regulations define the amount
of property encompassed by the restrictions. Finally, ... regulations set
forth the duration of the restrictions.

Id.

(217) There remains a fundamental question regarding whether the
biological opinions actually restricted the plaintiffs' property or
merely outlined the steps necessary for benefiting from the terms and
conditions associated with the incidental take permit.

(231) See, e.g., Forest Props., 177 F.3d at 1364 (discussing
physical versus regulatory takings language and finding claim based on
the denial of the permit to fill wetland to be a "classic
regulatory taking claim").

(232) See supra notes 52-54 and accompanying text.

(233) The lack of actual economic injury makes this case quite
similar to the Supreme Court's decision in Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470 (1987). Keystone Bituminous
Coal came several decades after Mahon and was another Pennsylvania coal
case involving a no-subsidence provision similar to that in Mahon. The
plaintiffs argued that the reasoning in Mahon should apply to create a
taking per se. Id. at 474, 481. The Supreme Court disagreed. Noting that
the plaintiffs were actually being deprived of only a fraction of the
coal available (the law required them to leave 27 millions tons of coal
in place, which accounted for approximately two percent of the total),
the court held that the regulation was not facially invalid merely
because it required some coal to be left in the ground. Id. at 496-99.

(234) The "damages" phase of the Tulare case is scheduled
for mid-July 2002. It will be interesting to see how the plaintiffs
attempt to calculate their per se taking damages when they have up to
this point failed to demonstrate any damages in fact.

* Natural Resources Law Institute Fellow, Lewis & Clark Law
School, 2001-02; J.D., University of Idaho, 1998. The author thanks Reed
Benson, Fred Disheroon, Dale Goble, Brian Gray, Dana Jacobson, Duane
Mecham, Zyg Plater, Gregory Thonms, and Janet Neuman, Michael Blumm, and
the rest of the natural resources faculty at Lewis & Clark Law
School for their advice and contributions to this Article. Special
thanks to Janice Weis and the Natural Resources Law Institute for
supporting this work.

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